Author Topic: Underwriting Question: How does a HELOC change your debt to income ratio  (Read 143 times)

clarkfan1979

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I'm in the process of trying to set up a HELOC for my primary residence and want to make sure that I stay under 45% debt to income.

If I pull $40,000 at 5.7%, the monthly payment for the 10-year draw period is $190/month. I spoke with a banker and based on their underwriting, they use 1% of the total loan when calculating debt to income, which is $400/month.

If the monthly debt payment is $190/month, our debt to income is 1,568/4150 = 38%

If the monthly debt payment is $400/month, our debt to income is 1,778/4150 = 43%

***Question: For underwriting purposes, would our monthly payment be considered $190/month or $400/month?